Chapter 08 The Service Encounter Mc GrawHillIrwin Service

Chapter 08 The Service Encounter Mc. Graw-Hill/Irwin Service Management: Operations, Strategy, and Information Technology, 6 e Copyright © 2008 by The Mc. Graw-Hill Companies, Inc. All Rights Reserved.

Learning Objectives n n n n Use the service encounter triad to describe a service firm’s delivery process. Explain how the culture and level of employee empowerment in an organization affect the service encounter. Differentiate four organizational control systems for employee empowerment. Describe the classification of customers into four groups based on their attitudes and expectations. Prepare abstract questions and write situational vignettes to screen recruits. Describe how the creation of an ethical climate leads to job satisfaction and service quality. Discuss the role scripts in customer coproduction. Describe how elements of the service profit chain lead to revenue growth and profitability. 8 -2

The Service Triad Service Organization Control versus autonomy Efficiency versus satisfaction Contact Personnel Customer Perceived control Note: Perceived control determines if a relationship or encounter is established between contact personnel and customer. 8 -3

Service Encounter Success Factors 8 -4

The Customer n n Expectations and Attitudes Economizing customer Ethical customer Personalizing customer Convenience customer Customer as Coproducer 8 -5

The Service Organization n n Culture Service. Master (Service to the Master) Disney (Choice of language) Empowerment Invest in people Use IT to enable personnel Recruitment and training critical Pay for performance 8 -6

Organizational Control System Objective Employee Challenge Management Challenge Key Issues Belief Contribute Uncertainty about purpose Communicate core values and mission Identify core values Boundary Compliance Pressure or temptation Specify and enforce rules Risks to be avoided Diagnostic Achieve Lack of focus Build and support clear targets Critical performance variables Interactive Create Lack of opportunity or fear of risk taking Open organizational dialogue to encourage learning Strategic Uncertainties 8 -7

Contact Personnel n n Selection 1. Abstract Questioning 2. Situational Vignette 3. Role Playing Training Unrealistic customer expectations Unexpected service failure 8 -8

Difficult Interactions with Customers Unrealistic customer expectations 1. Unreasonable demands 2. Demands against policies 3. Unacceptable treatment of employees 4. Drunkenness 5. Breaking of societal norms 6. Special-needs customers Unexpected service failure 1. Unavailable service 2. Slow performance 3. Unacceptable service Use scripts to train for proper response 8 -9

Examples of Unethical Behaviors Misrepresenting the Nature of the Service Customer Manipulation • Promising a nonsmoking room when none is available • Using bait-and-switch tactics • Creating a false need for service • Misrepresenting the credentials of the service provider • Exaggerating the benefits of a specific service offering • Giving away a guaranteed reservation • Performing unnecessary services • Padding a bill with hidden charges • Hiding damage to customer possessions • Making it difficult to invoke a service guarantee General Honesty and Integrity • Treating customers unfairly or rudely • Being unresponsive to customer requests • Failing to follow stated company policies • Stealing customer credit card information • Sharing customer information with third parties 8 -10

Customer and Employee Perceptions of Customer Service Outstanding Terrible Outstanding 8 -11

Satisfaction Mirror More Repeat Purchases Stronger Tendency to Complain about Service Errors Higher Customer Satisfaction Lower Costs Better Results More Familiarity with Customer Needs and Ways of Meeting Them Greater Opportunity for Recovery from Errors Higher Employee Satisfaction Higher Productivity Improved Quality of Service 8 -12

Service Profit Chain Internal External Operating strategy and service delivery system Service concept Target market Loyalty Revenue growth Customers Satisfaction Employees Capability Productivity & Output quality Service value Satisfaction Loyalty Profitability Service quality Customer orientation/quality emphasis Allow decision-making latitude Selection and development Rewards and recognition Information and communication Provide support systems Foster teamwork Quality & productivity improvements yield higher service quality and lower cost Attractive Value Service designed & delivered to meet targeted customers’ needs Solicit customer feedback Lifetime value Retention Repeat Business Referrals 8 -13

Amy’s Ice Cream Facility 8 -14

Amy’s Ice Cream 1. 2. 3. Describe the service organization culture at Amy’s Ice Cream. What are the personality attribute of the employees who are sought by Amy’s Ice Cream? Design a personnel selection procedure for Amy’s Ice Cream using abstract questioning, a situational vignette, and/or role playing. 8 -15

AMY’S ICE CREAM Abstract Questions n n What was your most rewarding past experience and why? What are you looking for in your next job? What have you done in the past to irritate a customer? What flavor of ice cream best describes your personality? 8 -16

AMY’S ICE CREAM Situational Vignette A particular customer has the irritating habit of always showing up about two minutes before closing and staying late. Often this occurs on the night when weekly store meeting are held after closing time. This delays starting the meeting and furthermore employees are on the clock waiting for the customer to leave. What would you do? 8 -17

Topics for Discussion n n How does the historical image of service as servitude affect today’s customer expectations and service employee behavior? What are the organizational and marketing implications of considering a customer as a “partial employee”? Comment on the different dynamics of one-on-one service and group service. How does use of a “service script” relate to service quality? If the roles played by customers are determined by cultural norms, how can services be exported? 8 -18